What changed in this filing

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Item 1. Financial Statements

2023-11-30 compared with 2023-08-31 · 134 added, 91 removed, 749 unchanged (23% of the section changed)

3 unchanged sentences

(in millions)

July 31, 2023 January 31, 2023

October 31, 2023 January 31, 2023

Assets (unaudited)

36 unchanged sentences

See accompanying Notes.

T a b l e o f C o n t e n t s

Salesforce, Inc.

1 unchanged sentence

(in millions, except per share data)

2 Three Months Ended July 31, Six Months Ended July 31,

3 Three Months Ended October 31, Nine Months Ended October 31,

2023 2022 2023 2022

24 unchanged sentences

(1) Amounts include amortization of intangible assets acquired through business combinations, as follows:

Three Months Ended July 31, Six Months Ended July 31,

Three Months Ended October 31, Nine Months Ended October 31,

2023 2022 2023 2022

2 unchanged sentences

(2) Amounts include stock-based compensation expense, as follows:

Three Months Ended July 31, Six Months Ended July 31,

Three Months Ended October 31, Nine Months Ended October 31,

2023 2022 2023 2022

5 unchanged sentences

See accompanying Notes.

T a b l e o f C o n t e n t s

Salesforce, Inc.

1 unchanged sentence

(in millions)

2 Three Months Ended July 31, Six Months Ended July 31,

3 Three Months Ended October 31, Nine Months Ended October 31,

2023 2022 2023 2022

Net income $ 1,224 $ 210 $ 2,690 $ 306

Other comprehensive income (loss), net of reclassification adjustments:

Foreign currency translation and other gains (losses) 5 ( 40 ) 11 ( 109 )

Other comprehensive loss, net of reclassification adjustments:

Foreign currency translation and other losses ( 65 ) ( 66 ) ( 54 ) ( 175 )

Unrealized gains (losses) on marketable securities and privately held debt securities ( 9 ) ( 77 ) 2 ( 179 )

Other comprehensive income (loss), before tax 0 ( 46 ) 22 ( 211 )

Other comprehensive loss, before tax ( 74 ) ( 143 ) ( 52 ) ( 354 )

Tax effect 1 17 ( 5 ) 39

Other comprehensive income (loss), net ( 3 ) ( 45 ) 16 ( 189 )

Other comprehensive loss, net ( 73 ) ( 126 ) ( 57 ) ( 315 )

Comprehensive income (loss) $ 1,151 $ 84 $ 2,633 $ ( 9 )

See accompanying Notes.

T a b l e o f C o n t e n t s

Salesforce, Inc.

1 unchanged sentence

(in millions)

Three and Six Months Ended July 31, 2023

Three and Nine Months Ended October 31, 2023

Common Stock Treasury Stock Additional

15 unchanged sentences

Balance at July 31, 2023 1,023 1 ( 48 ) ( 8,057 ) 57,345 ( 258 ) 9,051 58,082

Three and Six Months Ended July 31, 2022

Common Stock Additional

Common stock issued 3 0 0 0 111 0 0 111

Common stock repurchased 0 0 ( 9 ) ( 1,947 ) 0 0 0 ( 1,947 )

Stock-based compensation expense 0 0 0 0 693 0 0 693

Other comprehensive loss, net of tax 0 0 0 0 0 ( 73 ) 0 ( 73 )

Net income 0 0 0 0 0 0 1,224 1,224

Balance at October 31, 2023 1,026 $ 1 ( 57 ) $ ( 10,004 ) $ 58,149 $ ( 331 ) $ 10,275 $ 58,090

Three and Nine months ended October 31, 2022

Common Stock Treasury Stock Additional

Capital Accumulated Other Comprehensive Loss Retained Earnings Total

Stockholders’

Shares Amount

Shares Amount Shares Amount

Balance at January 31, 2022 989 $ 1 0 $ 0 $ 50,919 $ ( 166 ) $ 7,377 $ 58,131

9 unchanged sentences

Balance at July 31, 2022 999 1 0 0 52,979 ( 355 ) 7,473 60,098

Common stock issued 3 0 0 0 69 0 0 69

Common stock repurchased 0 0 ( 11 ) ( 1,743 ) 0 0 0 ( 1,743 )

Stock-based compensation expense 0 0 0 0 843 0 0 843

Other comprehensive loss, net of tax 0 0 0 0 0 ( 126 ) 0 ( 126 )

Net income 0 0 0 0 0 0 210 210

Balance at October 31, 2022 1,002 $ 1 ( 11 ) $ ( 1,743 ) $ 53,891 $ ( 481 ) $ 7,683 $ 59,351

See accompanying Notes.

T a b l e o f C o n t e n t s

Salesforce, Inc.

1 unchanged sentence

(in millions)

2 Three Months Ended July 31, Six Months Ended July 31,

3 Three Months Ended October 31, Nine Months Ended October 31,

2023 2022 2023 2022

22 unchanged sentences

Capital expenditures ( 166 ) ( 198 ) ( 589 ) ( 580 )

Net cash used in investing activities ( 1,152 ) ( 377 ) ( 805 ) ( 2,834 )

Net cash provided by (used in) investing activities ( 54 ) 533 ( 859 ) ( 2,301 )

Financing activities:

3 unchanged sentences

Repayments of debt 0 ( 1 ) ( 1,182 ) ( 3 )

Net cash provided by (used in) financing activities ( 2,050 ) 136 ( 4,766 ) 337

Net cash used in financing activities ( 1,765 ) ( 1,678 ) ( 6,531 ) ( 1,341 )

Effect of exchange rate changes ( 32 ) ( 23 ) ( 4 ) ( 69 )

4 unchanged sentences

See accompanying Notes.

T a b l e o f C o n t e n t s

Salesforce, Inc.

2 unchanged sentences

(in millions)

Three Months Ended July 31, Six Months Ended July 31,

Three Months Ended October 31, Nine Months Ended October 31,

2023 2022 2023 2022

4 unchanged sentences

See accompanying Notes.

T a b l e o f C o n t e n t s

Salesforce, Inc.

4 unchanged sentences

(the “Company”) is a global leader in customer relationship management technology that brings companies and customers together.

With the Customer 360 platform, the Company delivers a single source of truth, connecting customer data across systems, apps and devices to help companies sell, service, market and conduct commerce from anywhere.

With the Customer 360 platform, the Company delivers a single source of truth, connecting customer data with integrated artificial intelligence across systems, apps and devices to help companies sell, service, market and conduct commerce from anywhere.

Since its founding in 1999, Salesforce has pioneered innovations in cloud, mobile, social, analytics and artificial intelligence, enabling companies of every size and industry to transform their businesses in the all-digital, work-from-anywhere era.

2 unchanged sentences

Basis of Presentation

The accompanying condensed consolidated balance sheet as of July 31, 2023 and the condensed consolidated statements of operations, condensed consolidated statements of comprehensive income (loss), condensed consolidated statements of stockholders' equity and condensed consolidated statements of cash flows for the three and six months ended July 31, 2023 and 2022, respectively, are unaudited.

The accompanying condensed consolidated balance sheet as of October 31, 2023 and the condensed consolidated statements of operations, condensed consolidated statements of comprehensive income (loss), condensed consolidated statements of stockholders' equity and condensed consolidated statements of cash flows for the three and nine months ended October 31, 2023 and 2022, respectively, are unaudited.

These financial statements have been prepared in accordance with U.S.

3 unchanged sentences

GAAP for complete financial statements.

In the opinion of the Company’s management, the unaudited condensed consolidated financial statements include all adjustments necessary for the fair presentation of the Company’s balance sheet as of July 31, 2023, and its results of operations, including its comprehensive income (loss), stockholders' equity and its cash flows for the three and six months ended July 31, 2023 and 2022.

In the opinion of the Company’s management, the unaudited condensed consolidated financial statements include all adjustments necessary for the fair presentation of the Company’s balance sheet as of October 31, 2023, and its results of operations, including its comprehensive income (loss), stockholders' equity and its cash flows for the three and nine months ended October 31, 2023 and 2022.

All adjustments are of a normal recurring nature.

The results for the three and six months ended July 31, 2023 are not necessarily indicative of the results to be expected for any subsequent quarter or for the fiscal year ending January 31, 2024.

The results for the three and nine months ended October 31, 2023 are not necessarily indicative of the results to be expected for any subsequent quarter or for the fiscal year ending January 31, 2024.

These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2023, filed with the Securities and Exchange Commission (the “SEC”) on March 8, 2023.

15 unchanged sentences

All significant intercompany balances and transactions have been eliminated in consolidation.

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The Company operates as one operating segment.

12 unchanged sentences

Receivables are written off and charged against the recorded allowance when the Company has exhausted collection efforts without success.

No single customer accounted for more than five percent of accounts receivable as of July 31, 2023 and January 31, 2023.

No single customer accounted for five percent or more of total revenue during the six months ended July 31, 2023 and 2022.

As of July 31, 2023 and January 31, 2023, assets located outside the Americas were 15 percent of total assets.

As of July 31, 2023 and January 31, 2023, assets located in the United States were 84 percent and 83 percent of total assets, respectively.

As of October 31, 2023, one customer accounted for approximately six percent of accounts receivable, and no other customers accounted for more than five percent of accounts receivable.

No single customer accounted for more than five percent of accounts receivable as of January 31, 2023.

No single customer accounted for five percent or more of total revenue during the three and nine months ended October 31, 2023 and 2022.

As of October 31, 2023 and January 31, 2023, assets located outside the Americas were 14 percent and 15 percent of total assets, respectively.

As of October 31, 2023 and January 31, 2023, assets located in the United States were 84 percent and 83 percent of total assets, respectively.

The Company is also exposed to concentrations of risk in its strategic investment portfolio, including within specific industries, as the Company primarily invests in enterprise cloud companies, technology st artups and system integrators.

As of July 31, 2023, the Company held two investments, both privately held, with carrying values that were individually greater than five percent of its total strategic investments portfolio and represented 16 percent of the portfolio in aggregate.

As of October 31, 2023, the Company held two investments, both privately held, with carrying values that were individually greater than five percent of its total strategic investments portfolio and represented 16 percent of the portfolio in aggregate.

As of January 31, 2023, the Company held two investments, both privately held, with carrying values that were individuall y greater than five percent of its strategic investment portfolio and represented 16 percent of the portfolio in aggregate.

12 unchanged sentences

• recognition of revenue when or as the Company satisfies the performance obligations.

T a b l e o f C o n t e n t s

Subscription and Support Revenues

35 unchanged sentences

Capitalized amounts consist primarily of sales commissions paid to the Company’s direct sales

T a b l e o f C o n t e n t s

Capitalized amounts also include (1) amounts paid to employees other than the direct sales force who earn incentive payouts under annual compensation plans that are tied to the value of contracts acquired, (2) commissions paid to employees upon renewals of subscription and support contracts, (3) the associated payroll taxes and fringe benefit costs associated with the payments to the Company’s employees and (4) to a lesser extent, success fees paid to partners in emerging markets where the Company has a limited presence.

5 unchanged sentences

Amortization of capitalized costs to obtain revenue contracts is included in marketing and sales expense in the accompanying condensed consolidated statements of operations.

There were no impairments of costs to obtain revenue contracts for the three and six months ended July 31, 2023 and 2022.

There were no impairments of costs to obtain revenue contracts for the three and nine months ended October 31, 2023 and 2022.

Cash and Cash Equivalents

21 unchanged sentences

Publicly held equity securities are measured at fair value with changes recorded through gains (losses) on strategic investments, net on the condensed consolidated statements of operations.

T a b l e o f C o n t e n t s

The Company may enter into strategic investments or other investments that are considered variable interest entities (“VIEs”).

13 unchanged sentences

While the contract or notional amount is often used to express the volume of foreign currency derivative contracts, the amounts potentially subject to credit risk are generally limited to the amounts, if any, by which the counterparties’ obligations under the agreements exceed the obligations of the Company to the counterparties.

The notional amount of foreign currency derivative contracts as of July 31, 2023 and January 31, 2023 was $ 5.0 billion and $ 6.0 billion, respectively.

The notional amount of foreign currency derivative contracts as of October 31, 2023 and January 31, 2023 was $ 7.3 billion and $ 6.0 billion, respectively.

Outstanding foreign currency derivative contracts are recorded at fair value on the condensed consolidated balance sheets.

15 unchanged sentences

The Company does not recognize ROU assets or lease liabilities for leases with a term of 12 months or less for any asset classes.

T a b l e o f C o n t e n t s

Lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement, net of any future tenant incentives.

32 unchanged sentences

In the event the Company acquires an entity with which the Company has a preexisting relationship, the Company will generally recognize a gain or loss to settle that relationship as of the acquisition date within operating income on the condensed

T a b l e o f C o n t e n t s

consolidated statements of operations.

29 unchanged sentences

The Company regularly reviews the deferred tax assets for recoverability based on historical taxable income, projected future taxable income,

T a b l e o f C o n t e n t s

the expected timing of the reversals of existing temporary differences and tax planning strategies.

20 unchanged sentences

Subscription and support revenues consisted of the following (in millions):

Three Months Ended July 31, Six Months Ended July 31,

Three Months Ended October 31, Nine Months Ended October 31,

2023 2022 2023 2022

6 unchanged sentences

(1) Data is comprised of revenue from Analytics, which includes Tableau, and Integration, which includes Mulesoft.

T a b l e o f C o n t e n t s

Total Revenue by Geographic Locations

Revenues by geographical region consisted of the following (in millions):

Three Months Ended July 31, Six Months Ended July 31,

Three Months Ended October 31, Nine Months Ended October 31,

2023 2022 2023 2022

4 unchanged sentences

Revenues by geography are determined based on the region of the Company's contracting entity, which may be different than the region of the customer.

Americas revenue attributed to the United States was approximately 93 percent and 92 percent during the three months ended July 31, 2023 and 2022.

Americas’ revenue attributed to the United States was approximately 93 percent during the six months ended July 31, 2023 and 2022.

No other country represented more than ten percent of total revenue during the three and six months ended July 31, 2023 and 2022.

Americas revenue attributed to the United States was approximately 93 percent and 92 percent during the three months ended October 31, 2023 and 2022, respectively.

Americas’ revenue attributed to the United States was approximately 93 percent during the nine months ended October 31, 2023 and 2022.

No other country represented more than ten percent of total revenue during the three and nine months ended October 31, 2023 and 2022.

Contract Balances

1 unchanged sentence

The Company records a contract asset when revenue recognized on a contract exceeds the billings.

Contract assets were $ 700 million as of July 31, 2023 as compared to $ 648 million as of January 31, 2023, and are included in prepaid expenses and other current assets and deferred tax assets and other assets, net on the condensed consolidated balance sheets.

Contract assets were $ 866 million as of October 31, 2023 as compared to $ 648 million as of January 31, 2023, and are included in prepaid expenses and other current assets and deferred tax assets and other assets, net on the condensed consolidated balance sheets.

Unearned Revenue

3 unchanged sentences

The change in unearned revenue was as follows (in millions):

Three Months Ended July 31, Six Months Ended July 31,

Three Months Ended October 31, Nine Months Ended October 31,

2023 2022 2023 2022

16 unchanged sentences

Unbilled portions of the remaining performance obligation denominated in foreign currencies are revalued each period based on the period end exchange rates.

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Remaining performance obligation is subject to future economic risks, including bankruptcies, regulatory changes and other market factors.

3 unchanged sentences

Current Noncurrent Total

As of July 31, 2023 $ 24.1 $ 22.5 $ 46.6

As of October 31, 2023 $ 23.9 $ 24.4 $ 48.3

As of January 31, 2023 $ 24.6 $ 24.0 $ 48.6

Marketable Securities

At July 31, 2023, marketable securities consisted of the following (in millions):

At October 31, 2023, marketable securities consisted of the following (in millions):

Cost Unrealized

24 unchanged sentences

The contractual maturities of the investments classified as marketable securities were as follows (in millions):

July 31, 2023 January 31, 2023

October 31, 2023 January 31, 2023

Due within 1 year $ 2,169 $ 2,380

2 unchanged sentences

$ 5,410 $ 5,492

T a b l e o f C o n t e n t s

Strategic Investments

Strategic investments by form and measurement category as of July 31, 2023 were as follows (in millions):

Strategic investments by form and measurement category as of October 31, 2023 were as follows (in millions):

Measurement Category

2 unchanged sentences

Debt securities and other investments 0 0 69 69

Balance as of July 31, 2023

Balance as of October 31, 2023

$ 51 $ 4,518 $ 205 $ 4,774

7 unchanged sentences

The Company holds investments in, or management agreements with, VIEs which the Company does not consolidate because it is not considered the primary beneficiary of these entities.

The carrying value of VIEs within strategic investments was $ 419 million and $ 354 million, as of July 31, 2023 and January 31, 2023, respectively.

The carrying value of VIEs within strategic investments was $ 419 million and $ 354 million, as of October 31, 2023 and January 31, 2023, respectively.

Gains (Losses) on Strategic Investments, Net

The components of gains and losses on strategic investments were as follows (in millions):

2 Three Months Ended July 31, Six Months Ended July 31,

3 Three Months Ended October 31, Nine Months Ended October 31,

2023 2022 2023 2022

Unrealized gains (losses) recognized on publicly traded equity securities, net $ 2 $ ( 29 ) $ 2 $ ( 103 )

Unrealized losses recognized on publicly traded equity securities, net $ ( 2 ) $ 0 $ 0 $ ( 103 )

Unrealized gains recognized on privately held equity securities, net 14 57 65 174

4 unchanged sentences

Unrealized gains and losses recognized on privately held equity securities, net includes upward and downward adjustments from equity securities accounted for under the measurement alternative, as well as gains and losses from private equity securities in other measurement categories.

For privately held securities accounted for under the measurement alternative, the Company recorded upward adjustments of $ 6 million and $ 52 million and impairments and downward adjustments of $ 81 million and $ 20 million for the three months ended July 31, 2023 and 2022, respectively, and upward adjustments of $ 52 million and $ 130 million and impairments of $ 256 million and $ 30 million for the six months ended July 31, 2023 and 2022, respectively.

For privately held securities accounted for under the measurement alternative, the Company recorded upward adjustments of $ 14 million and $ 66 million and impairments and downward adjustments of $ 98 million and $ 66 million for the three months ended October 31, 2023 and 2022, respectively, and upward adjustments of $ 65 million and $ 196 million and impairments of $ 354 million and $ 96 million for the nine months ended October 31, 2023 and 2022, respectively.

Realized gains on sales of securities, net reflects the difference between the sale proceeds and the carrying value of the security at the beginning of the period or the purchase date, if later.

5 unchanged sentences

All of the Company’s cash equivalents, marketable securities and foreign currency derivative contracts are classified within Level 1 or Level 2 because the Company’s cash equivalents, marketable securities and foreign currency derivative contracts are valued using quoted market prices or alternative pricing sources and models utilizing observable market inputs.

The following table presents information about the Company’s assets and liabilities that were measured at fair value as of July 31, 2023 and indicates the fair value hierarchy of the valuation (in millions):

T a b l e o f C o n t e n t s

The following table presents information about the Company’s assets and liabilities that were measured at fair value as of October 31, 2023 and indicates the fair value hierarchy of the valuation (in millions):

Description Quoted Prices in

20 unchanged sentences

Total assets $ 3,145 $ 7,030 $ 0 $ 10,175

(1) Included in “cash and cash equivalents” in the accompanying condensed consolidated balance sheets in addition to $ 2.0 billion of cash, as of July 31, 2023.

(1) Included in “cash and cash equivalents” in the accompanying condensed consolidated balance sheets in addition to $ 1.7 billion of cash, as of October 31, 2023.

The following table presents information about the Company’s assets and liabilities that were measured at fair value as of January 31, 2023 and indicates the fair value hierarchy of the valuation (in millions):

22 unchanged sentences

(1) Included in “cash and cash equivalents” in the accompanying condensed consolidated balance sheets in addition to $ 2.6 billion of cash, as of January 31, 2023.

T a b l e o f C o n t e n t s

Strategic Investments Measured and Recorded at Fair Value on a Non-Recurring Basis

6 unchanged sentences

When indicators of impairment are observed for privately held equity securities, the Company generally uses the market approach to estimate the fair value of its investment, giving consideration to the latest observable transactions, as well as the investee's current and projected financial performance and other significant inputs and assumptions, including estimated time to exit, selection and analysis of guideline public companies and the rights and obligations of the securities the Company holds.

The Company's privately held debt and equity securities and other investments amounted to $ 4.7 billion and $ 4.6 billion as of July 31, 2023 and January 31, 2023.

The Company's privately held debt and equity securities and other investments amounted to $ 4.7 billion and $ 4.6 billion as of October 31, 2023 and January 31, 2023, respectively.

Leases and Other Commitments

The Company has leases for corporate offices, data centers and equipment under non-cancelable operating and finance leases with various expiration dates.

Total operating lease costs were $ 191 million and $ 220 million for the three months ended July 31, 2023 and 2022, respectively, and were $ 660 million and $ 453 million for the six months ended July 31, 2023 and 2022, respectively.

Total operating lease costs were $ 163 million and $ 239 million for the three months ended October 31, 2023 and 2022, respectively, and were $ 823 million and $ 692 million for the nine months ended October 31, 2023 and 2022, respectively.

Included in operating lease costs are amounts related to restructuring charges, which are discussed in Note 8 “Restructuring.”

As of July 31, 2023, the maturities of lease liabilities under non-cancelable operating and finance leases were as follows (in millions):

As of October 31, 2023, the maturities of lease liabilities under non-cancelable operating and finance leases were as follows (in millions):

Operating Leases Finance Leases

Fiscal Period:

Remaining six months of fiscal 2024 $ 243 $ 184

Remaining three months of fiscal 2024 $ 143 $ 96

Fiscal 2025 610 399

6 unchanged sentences

Total $ 3,287 $ 1,047

As of July 31, 2023, the Company has additional operating and finance leases that have not yet commenced totaling $ 268 million, which are not reflected on the condensed consolidated balance sheets or the tables above.

As of October 31, 2023, the Company has additional operating and finance leases that have not yet commenced totaling $ 84 million, which are not reflected on the condensed consolidated balance sheets or the tables above.

These leases will commence between fiscal year 2024 and fiscal year 2025 with lease terms of 2 to 16 years.

Other Balance Sheet Accounts

Accounts payable, accrued expenses and other liabilities as of July 31, 2023 included approximately $ 1.6 billion of accrued compensation as compared to $ 2.6 billion as of January 31, 2023.

Accounts payable, accrued expenses and other liabilities as of October 31, 2023 included approximately $ 1.8 billion of accrued compensation as compared to $ 2.6 billion as of January 31, 2023.

T a b l e o f C o n t e n t s

Intangible Assets Acquired Through Business Combinations and Goodwill

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Remaining Useful Life (Years)

January 31, 2023 Additions and retirements, net July 31, 2023 January 31, 2023 Expense and retirements, net July 31, 2023 January 31, 2023 July 31, 2023 July 31, 2023

January 31, 2023 Additions and retirements, net October 31, 2023 January 31, 2023 Expense and retirements, net October 31, 2023 January 31, 2023 October 31, 2023 October 31, 2023

Acquired developed technology $ 4,844 $ 23 $ 4,867 $ ( 2,471 ) $ ( 743 ) $ ( 3,214 ) $ 2,373 $ 1,653 2.4

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(1) Included in other are in-place leases, trade names, trademarks and territory rights.

Amortization of intangible assets resulting from business combinations for the three months ended July 31, 2023 and 2022 was $ 472 million and $ 492 million, respectively, and for the six months ended July 31, 2023 and 2022 was $ 943 million and $ 1.0 billion, respectively.

The expected future amortization expense for intangible assets as of July 31, 2023 was as follows (in millions):

Amortization of intangible assets resulting from business combinations for the three months ended October 31, 2023 and 2022 was $ 468 million and $ 474 million, respectively, and for the nine months ended October 31, 2023 and 2022 was $ 1.4 billion and $ 1.5 billion, respectively.

The expected future amortization expense for intangible assets as of October 31, 2023 was as follows (in millions):

Fiscal Period:

Remaining six months of fiscal 2024 $ 924

Remaining three months of fiscal 2024 $ 459

Fiscal 2025 1,605

7 unchanged sentences

Balance as of January 31, 2023 $ 48,568

Adjustments (1) ( 2 )

Balance as of July 31, 2023 $ 48,566

(1) Adjustments include the effect of foreign currency translation.

Acquisitions and adjustments (1) 46

Balance as of October 31, 2023 $ 48,614

(1) Acquisitions and adjustments include the effect of foreign currency translation.

T a b l e o f C o n t e n t s

The components of the Company's borrowings were as follows (in millions):

Instrument Date of Issuance Maturity Date Contractual Interest Rate Outstanding Principal as of July 31, 2023

Carrying Value as of July 31, 2023 Carrying Value as of January 31, 2023

Instrument Date of Issuance Maturity Date Contractual Interest Rate Outstanding Principal as of October 31, 2023

Carrying Value as of October 31, 2023 Carrying Value as of January 31, 2023

2023 Senior Notes (1) April 2018 April 2023 3.25 % $ 0 $ 0 $ 1,000

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(2) The Company repaid in full the Loan assumed on 50 Fremont in the second quarter of fiscal 2024.

The Company was in compliance with all debt covenants as of July 31, 2023.

The total estimated fair value of the Company's outstanding senior unsecured notes (the “Senior Notes”) above was $ 7.6 billion and $ 8.8 billion as of July 31, 2023 and January 31, 2023 , respectively.

The fair value was determined based on the closing trading price per $ 100 of the Senior Notes as of the last day of trading of the second quarter of fiscal 2024 and the last day of trading of fiscal 2023, respectively, and are deemed Level 2 liabilities within the fair value measurement framework.

The contractual future principal payments for all borrowings as of July 31, 2023 were as follows (in millions):

The Company was in compliance with all debt covenants as of October 31, 2023.

The total estimated fair value of the Company's outstanding senior unsecured notes (the “Senior Notes”) above was $ 7.1 billion and $ 8.8 billion as of October 31, 2023 and January 31, 2023 , respectively.

The fair value was determined based on the closing trading price per $ 100 of the Senior Notes as of the last day of trading of the third quarter of fiscal 2024 and the last day of trading of fiscal 2023, respectively, and are deemed Level 2 liabilities within the fair value measurement framework.

The contractual future principal payments for all borrowings as of October 31, 2023 were as follows (in millions):

Fiscal Period:

Remaining six months of fiscal 2024 $ 0

Remaining three months of fiscal 2024 $ 0

Fiscal 2025 1,000

8 unchanged sentences

The Company amended the Revolving Loan Credit Agreement in April 2022 and May 2023, in each case to reflect certain administrative changes.

There were no outstanding borrowings under the Credit Facility as of July 31, 2023.

There were no outstanding borrowings under the Credit Facility as of October 31, 2023.

Restructuring

3 unchanged sentences

The actions associated with the real estate restructuring under the Restructuring Plan are expected to be fully complete in fiscal 2026.

The following table summarizes the activities related to the Restructuring Plan for the three and six months ended July 31, 2023 (in millions):

Three Months Ended July 31, 2023 Six Months Ended July 31, 2023

T a b l e o f C o n t e n t s

The following table summarizes the activities related to the Restructuring Plan for the three and nine months ended October 31, 2023 (in millions):

Three Months Ended October 31, 2023 Nine Months Ended October 31, 2023

Workforce Reduction Office Space Reductions Total Workforce Reduction Office Space Reductions Total

4 unchanged sentences

Liability, end of the period $ 61 $ 3 $ 64 $ 61 $ 3 $ 64

As of July 31, 2023, the liability for restructuring charges, which is related to workforce reductions, is included in accounts payable, accrued expenses and other liabilities on the condensed consolidated balance sheet.

As of October 31, 2023, the liability for restructuring charges, which is related to workforce and office space reductions, is included in accounts payable, accrued expenses and other liabilities on the condensed consolidated balance sheet.

The charges reflected in the table above related to workforce reduction included charges for employee transition, severance payments, employee benefits and share-based compensation.

The charges reflected in the table above related to office space reductions included exit charges associated with those reductions.

Stockholders’ Equity

Stock option activity for the six months ended July 31, 2023 was as follows:

Stock option activity for the nine months ended October 31, 2023 was as follows:

Options Outstanding

5 unchanged sentences

Plan shares expired or canceled ( 2 ) 204.09

Balance as of July 31, 2023 18 $ 182.12 $ 2,162

Balance as of October 31, 2023 16 $ 183.84 $ 480

Vested or expected to vest 16 $ 183.01 $ 474

Exercisable as of July 31, 2023 11 $ 168.73 $ 1,435

Restricted stock activity for the six months ended July 31, 2023 was as follows:

Exercisable as of October 31, 2023 11 $ 172.98 $ 407

Restricted stock activity for the nine months ended October 31, 2023 was as follows:

Restricted Stock Outstanding

6 unchanged sentences

Vested and converted to shares ( 10 ) 203.80

Balance as of July 31, 2023 31 $ 199.82 $ 7,016

Balance as of October 31, 2023 28 $ 199.88 $ 5,807

Expected to vest 25 $ 4,974

The aggregate expected stock-based compensation expense remaining to be recognized as of July 31, 2023 was as follows (in millions):

T a b l e o f C o n t e n t s

The aggregate expected stock-based compensation expense remaining to be recognized as of October 31, 2023 was as follows (in millions):

Fiscal Period:

Remaining six months of fiscal 2024 $ 1,424

Remaining three months of fiscal 2024 $ 697

Fiscal 2025 2,234

1 unchanged sentence

Fiscal 2027 796

Thereafter 132

Fiscal 2028 151

Total stock-based compensation expense $ 5,496

The aggregate expected stock-based compensation expense remaining to be recognized reflects only outstanding stock awards as of July 31, 2023 and assumes no forfeiture activity and no changes in the expected level of attainment of performance share grants based on the Company’s financial performance relative to certain targets.

The aggregate expected stock-based compensation expense remaining to be recognized reflects only outstanding stock awards as of October 31, 2023 and assumes no forfeiture activity and no changes in the expected level of attainment of performance share grants based on the Company’s financial performance relative to certain targets.

Share Repurchase Program

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The Company accounts for treasury stock under the cost method.

During the three and six months ended July 31, 2023, the Company repurchased approximately 9 million and 20 million shares of its common stock for approximately $ 1.9 billion and $ 4.1 billion, at an average price per share of $ 211.83 and $ 198.63 , respectively.

During the three and nine months ended October 31, 2023, the Company repurchased approximately 9 million and 29 million shares of its common stock for approximately $ 1.9 billion and $ 6.0 billion, at an average price per share of $ 209.33 and $ 201.95 , respectively.

During the three and nine months ended October 31, 2022, the Company repurchased approximately 11 million shares of its common stock for approximately $ 1.7 billion at an average price per share of $ 152.66 .

All repurchases were made in open market transactions.

As of July 31, 2023, the Company was authorized to purchase a remaining $ 11.9 billion of its common stock under the Share Repurchase Program.

As of October 31, 2023, the Company was authorized to purchase a remaining $ 10.0 billion of its common stock under the Share Repurchase Program.

Effective Tax Rate

The Company computes its year-to-date provision for income taxes by applying the estimated annual effective tax rate to year-to-date pretax income or loss and adjusts the provision for discrete tax items recorded in the period.

For the six months ended July 31, 2023, the Company reported a tax provision of $ 352 million on pretax income of $ 1.8 billion, which resulted in an effective tax rate of 19 percent.

For the nine months ended October 31, 2023, the Company reported a tax provision of $ 615 million on pretax income of $ 3.3 billion, which resulted in an effective tax rate of 19 percent.

The Company’s effective tax rate differed from the U.S.

statutory rate of 21 percent primarily due to discrete benefits from foreign tax credits attributable to the IRS Notice 2023-55 and certain adjustments resulted from a transfer pricing agreement in a foreign tax jurisdiction, partially offset by profitable jurisdictions outside of the United States subject to tax rates greater than 21 percent and withholding taxes.

For the six months ended July 31, 2022, the Company reported a tax provision of $ 56 million on pretax income of $ 152 million, which resulted in an effective tax rate of 37 percent.

statutory rate of 21 percent primarily due to discrete benefits from research and development credits, foreign tax credits attributable to the IRS Notice 2023-55, and certain adjustments resulted from a transfer pricing agreement in a foreign tax jurisdiction, partially offset by profitable jurisdictions outside of the United States subject to tax rates greater than 21 percent and withholding taxes.

For the nine months ended October 31, 2022, the Company reported a tax provision of $ 321 million on pretax income of $ 627 million, which resulted in an effective tax rate of 51 percent.

The Company’s effective tax rate differed from the U.S.

statutory rate of 21 percent primarily due to profitable jurisdictions outside of the United States subject to tax rates greater than 21 percent and withholding taxes, offset by certain adjustments resulting from a transfer pricing agreement with a major tax jurisdiction.

statutory rate of 21 percent primarily due to profitable jurisdictions outside of the United States subject to tax rates greater than 21 percent and withholding taxes.

Unrecognized Tax Benefits and Other Considerations

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As the outcome of the tax audits cannot be predicted with certainty, if any issues arising in the Company’s tax audits progress in a manner inconsistent with management's expectations, the Company could adjust its provision for income taxes in the future.

In addition, the Company anticipates it is reasonably possible that an insignificant decrease of its unrecognized tax benefits may occur in the next 12 months, as the applicable statutes of limitations lapse, ongoing examinations are completed, or tax positions meet the conditions of being effectively settled.

In addition, the Company anticipates it is reasonably possible that an insignificant decrease of its unrecognized tax benefits may occur in the

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next 12 months, as the applicable statutes of limitations lapse, ongoing examinations are completed, or tax positions meet the conditions of being effectively settled.

Net Income Per Share

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A reconciliation of the denominator used in the calculation of basic and diluted earnings per share is as follows (in millions):

2 Three Months Ended July 31, Six Months Ended July 31,

3 Three Months Ended October 31, Nine Months Ended October 31,

2023 2022 2023 2022

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The effects of these potentially outstanding shares were not included in the calculation of diluted earnings per share because the effect would have been anti-dilutive (in millions):

Three Months Ended July 31, Six Months Ended July 31,

Three Months Ended October 31, Nine Months Ended October 31,

2023 2022 2023 2022

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Beginning in September 2019, seven purported class action lawsuits were filed against Slack, its directors, certain of its officers and certain investment funds associated with certain of its directors, each alleging violations of securities laws in connection with Slack’s registration statement on Form S-1 (the “Registration Statement”) filed with the SEC.

All but one of these actions were filed in the Superior Court of California for the County of San Mateo, though one plaintiff originally filed in the County of San Francisco before refiling in the County of San Mateo (and the original San Francisco action was dismissed).

All but one of these actions were filed in the Superior Court of California for the County of San Mateo, though one plaintiff originally filed in

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the County of San Francisco before refiling in the County of San Mateo (and the original San Francisco action was dismissed).

The remaining action was filed in the U.S.

District Court for the Northern District of California (the “Federal Action”).

Federal Action, captioned Dennee v.

In the Federal Action, captioned Dennee v.

Slack Technologies, Inc., Case No.

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The Ninth Circuit ordered the parties to submit additional briefing in light of the Supreme Court’s decision.

That briefing has concluded, and the parties await rulings from the Ninth Circuit.

The state court actions were consolidated in November 2019, and the consolidated action is captioned In re Slack Technologies, Inc.

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On October 26, 2022, the court stayed the State Court Action pending resolution of Slack’s petition for a writ of certiorari in the Federal Action.

The State Court Action remains stayed.

The State Court Action remains stayed pending resolution of the appellate proceedings in the Federal Action.

The Federal Action and the State Court Action seek unspecified monetary damages and other relief on behalf of investors who purchased Slack’s Class A common stock issued pursuant and/or traceable to the Registration Statement.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements